The FTSE 100 traded firmly in the red on Friday as investors took a cautious approach to mounting macroeconomic considerations.

London’s leading index was down 0.3% at the time of writing as traders fielded a barrage of factors, including poor UK retail sales, the upcoming UK election, and ongoing geopolitical tensions.

“It’s not been the best of weeks for the FTSE 100, with the UK blue-chip index on track to end the five-day session down 1.7%. Inflation, interest rates, politics, declining commodity prices, rights issues, the list goes on and it is fair to say the market has had quite a bit to worry about,” said Russ Mould, investment director at AJ Bell.

“Risk appetite has diminished judging by what’s moving on the market. Utility stocks rebounded after yesterday’s sell-off triggered by National Grid’s rights issue and whether a Labour government might nationalise the country’s key utility providers. That was the only sector in demand on Friday, pretty much everything else in the FTSE 100 went into reverse.”

There were few major movers on Friday, suggesting investors were fine-tuning portfolios rather than making big decisions about positioning.

The selling of FTSE 100 stocks was broad but contained. Seventy of the FTSE 100’s constituents were trading in the red, with all but National Grid dropping less than 3%. National Grid was down 10% as the dilution due to the rights issue announced this week took effect.

Retailing shares Tesco, Sainsbury’s, and Marks & Spencer posted surprise gains after UK retail sales fell much more than expected in April.

“Retail sales have sunk by far more than expected in the UK. There was a highly disappointing 2.3% decline in April, from a 0.2% dip in March,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“Clothing retailers have been particularly badly hit, with wet weather raining on efforts to get customers spending on new spring/summer wardrobes. Sports equipment and furniture stores were also met by weaker footfall, as the gloomy weather didn’t spark enthusiasm for house and garden touch ups, or exercise.”

Ocado was the FTSE 100’s top riser after JP Morgan raised its price target to 450p from 350p, maintaining its neutral rating on the stocks. Ocado shares were 2.5% higher at the time of writing.

Genedrive plc, the pharmacogenetic testing firm, has secured orders worth over £100,000 from five additional UK hospitals for its Genedrive MT-RNR1 rapid genetic testing kit.

The Royal Oldham, Stepping Hill, Royal Bolton, Royal Albert Edward Infirmary, and Tameside General hospitals have ordered the tests as they roll out the technology in their neonatal intensive care units (NICUs).

Genedrive shares rose over 4% on the news on Friday.

The five new sites more than double the number of UK NICUs routinely using Genedrive’s 26-minute genetic test. The non-invasive kit identifies newborns with a MT-RNR1 gene variant that puts them at high risk of hearing loss from aminoglycoside antibiotics. This allows clinicians to avoid prescribing those antibiotics for babies testing positive. The five new hospital NICUs admit around 1,900 babies annually.

The orders follow the test receiving a conditional recommendation from the UK’s health watchdog NICE in March 2023. While gathering further evidence for a full recommendation, the conditional status allows use of the test in the NHS.

The FTSE 100 took the surprise announcement of the general election in its stride on Thursday and the index was very marginally higher in mid-afternoon trade.

The prospect of a Labour government in just six week’s time has done little to upset UK equity markets. Far from sending a wave of panic through stocks, many UK-centric shares were actually trading materially higher as investors assessed the implications of Keir Starmer in Number 10 Downing Street.

Analysts cautioned that markets could experience gyrations during the election campaign but will ultimately usher in Starmer and his new government with little volatility.

“Equity markets could become more volatile during the election campaign, as party policies come under greater scrutiny and as opinion polls change. However, assuming opinion polls do not change materially in the run up to the election, we would expect the equity market reaction to a potential Labour win, which is currently widely expected, to be fairly muted. Markets do not like surprises and this would not be a surprise,” said Edward Stanford, Head of European Equity Strategy, HSBC.

“The bigger risk to markets in our view would be a closer election result that creates the impression of greater instability in the post-election period.”

Keir Starmer has been accused of being dull, which may actually turn out to be a good thing for UK stocks.

Housebuilding stocks were clearly favoured as a result of the election news, with Persimmon, Taylor Wimpey, and Barratts among the top risers.

The biggest FTSE 100 casualty on Thursday was National Grid – not because of the election – but because it launched a rights issue to bolster a £60bn investment spending plan.

National Grid shares were down 9% after announcing a £7bn rights issue alongside falling profits for the last year. United Utilities, Centrica, and Severn Trent fell in sympathy.

NVIDIA

As UK stocks traded sideways, there was a little more life in the US and Nvidia, who beat earnings estimates and confirmed the AI boom was still very much intact.

“Better news was to be found from NVIDIA, whose shares popped 6% after beating expectations. The group’s expected to ring the bell on a new all-time high, exceeding $1000 per share, when the US market opens,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“The chip specialist reported a 262% increase in revenue, as AI chip demand reached record levels. While questions about the longevity of NVIDIA’s technical supremacy are being whispered in some corners of the market, the group has raised the bar again with the Blackwell Platform, the world’s most powerful chip.

“Being at the forefront of the specialised end of this market is a highly enviable place to be, the big question, as ever, remains whether the current market valuation is a fair reflection of the remaining opportunity, or approaching dangerous territory.”

Notwithstanding concerns about a frothy valuation, Nvidia’s results will go a long way to keeping the equity bulls fired up with enthusiasm around AI demand in the coming months.

The travel boom has not been lost on Wizz Air, which enjoyed soaring passenger numbers and a massive revenue increase in its 2024 full year.

Wizz Air has joined the ranks of travel companies enjoying surging demand for their services as consumers choose to plough their discretionary spending into travel amid the cost of living crisis.

Passenger numbers increased 21% to 62m, and revenue soared 30% to €5.1bn. The airline successfully turned higher revenues into higher profits, with operating profit jumping to €437m from a €466m loss last year.

Investors were evidently encouraged by the swing back to profitability and shares soared 7% on Thursday.

“Wizz Air has soared back into profit after what’s been three gruelling years for the airline and their shareholders. The Hungary-based airline reported net profits of 366 million euros, compared with a net loss of 535 million euros a year earlier,” said Mark Crouch, analyst at investment platform eToro.

“Record passenger numbers amid surging demand, improving load factors and lowering unit costs have all played their part in propelling the airline back to profitability. 

“There is though, an air of what might have been. Disruption caused by the conflicts in Ukraine and the Middle East has significantly impacted the company’s bottom line with thousands of flights cancelled. And the ongoing problems of production hiccups with their Pratt and Whitney engines is another headwind the low-cost carrier could do without. 

“With the summer season just around the corner, Wizz Air would have wanted all their ducks in a row heading into such a crucial period. Yet despite receiving significant compensation for the disruption, many of their planes will be grounded with 20% of the fleet affected by the engine troubles.”

Waste to energy technology developer Eqtec (LON: EQT) has refinanced debt facilities with a new non-dilutive secured facility for up to £10m. Repayments will be based on performance rather than regular monthly payments. This includes 20% of cash generated in a fundraising and 25% of cash inflows. The fixed coupon is 9.5%. The share price recovered 17% to 1.55p.

Oil and gas producer Block Energy (LON: BLOE) reported a jump in 2023 EBITDA from $200,000 to $1.5m, helped by higher production and cost cutting. That was before a non-cash impairment charge of $2.2m. There was $700,000 in cash at the year-end and $2m loan facility that will need refinancing by August. The share price improved 11.3% to 1.475p.

Kodal Minerals (LON: KOD) says progress has been made on road construction and other capital investment for the 49%-owned Bougouni lithium project. Drilling continues so that the resource can be extended. Capex will be $65m and joint venture partner has provided $117.5m.  The share price rose 7.95% to 0.475p.

Celadon Pharmaceuticals (LON: CEL) has shipped two different medical cannabis products to the US. Celadon supplies an American business that supplies US government departments. A European sales contract should begin in the second half of 2024. The share price increased 2.5% to 102.5p.

FALLERS

Clontarf Energy (LON: CLON) raised £300,000 at 0.035p/share and the market price dipped 16.7% to 0.0375p. The cash will be spent on lithium projects in Bolivia and petroleum projects elsewhere.

Karelian Diamond Resources (LON: KDR) says that the Finnish Land Court will give its judgment on two landowners’ compensation claim on 12 August. This relates to the development of the Lahtojoki diamond deposit. The share price declined 10.9% to 2.85p.

MRI device developer Polarean Imaging (LON: POLX) shares continue to fall following the launch of a placing, subscription of open offer. The placing and subscription raised £8m at 1p/share with £2m of that invested by NUKEM Isotopes and £1.6m by Bracco – both existing investors. Up to £2m could be raised from an open offer. The share price slipped 8.62% to a new low of 1.325p.

Energy and water efficiency services provider Eneraqua Technologies (LON: ETP) reported 2023-24 results in line with the trading statement earlier in the year. The business moved from a pre-tax profit of £10.1m to a £6m loss as contracts were delayed. Cost savings have been put in place and additional work has been won so Eneraqua Technologies could move back into profit this year. A change of government could lead to additional incentives for energy saving projects. The share price still fell a further 7.69% to 36p.

Ex-dividends

Andrews Sykes (LON: ASY) is paying a final dividend of 14p/share and the share price declined 15p to 607.5p.

Avingtrans (LON: AVG) is paying an interim dividend of 1.8p/share and the share price is 5p lower at 415p.

Burford Capital (LON: BUR) is paying a final dividend of 4.91p/share and the share price slipped 2p to £11.01.

Empersaria (LON: EMR) is paying a final dividend of 1p/share and the share price fell 1p to 39p.

Fintel (LON: FNTL) is paying a final dividend of 2.35p/share and the share price 1.5p ahead at 298.5p.

HSS Hire (LON: HSS) is paying a final dividend of 0.38p/share and the share price dipped 0.625p to 10.075p.

Keywords Studios (LON: KWS) is paying a final dividend of 1.76p/share and the share price is 1p higher at £22.01.

Lords Group Trading (LON: LORD) is paying a final dividend of 1.33p/share and the share price is unchanged at 47p.

Mincon Group (LON: MCON) is paying a final dividend of 1.05 cents/share and the share price slipped 1p to 45p.

Nexus Infrastructure (LON: NEXS) is paying an interim dividend of 1p/share and the share price is unchanged at 100p.

Niox Group (LON: NIOX) is paying a final dividend of 1p/share and the share price declined 2p to 70.8p.

Weiss Korea Opportunity Fund (LON: WKOF) is paying a final dividend of 5.19p/share and the share price is unchanged at 175p.

National Grid shares dived on Thursday after the group announced a £7bn rights issue amid falling profits.

Investors may cut the company some slack because the funds raised will be used to power the rejuvenation of the National Grid’s infrastructure. National Grid plans to spend £60bn upgrading its network, including new onshore and offshore transmission projects in the US and the UK.

National Grid shares were down 9.9% at the time of writing.

The reaction in the share price may not have been so bad if news of the rights issues wasn’t accompanied by an 8% drop in statutory operating profits in the year to 30th March. 

“It’s not a good look when a company reports a slump in profits and then goes cap in hand to shareholders, asking them to stump up £7 billion,” said Russ Mould, investment director at AJ Bell.

“That’s exactly what’s happened with National Grid as it looks for financial support to boost its energy network investment. Some investors might view this as a bit cheeky, but others will be salivating at the chance to buy shares in a generous dividend payer at a big discount to the market price.

“One thing for certain is that National Grid’s rights issue has spooked investors about the state of the utility sector, with shares in United Utilities, Severn Trent and Drax falling in sympathy. It’s clear that a lot of money needs to be invested to upgrade infrastructure and investors are now speculating that we could see other equity placings across the listed sector.”

Although National Grid has earmarked huge amounts of capital for investment, which has caused short-term concern, it does provide a platform for long-term growth for investors.

Investors will also be happy to learn the dividend is unaffected and its income-bearing attributes remain robust.